Gamechangers

Five gamechanging policies you can introduce today

This memo invites lawmakers to pursue a list of progressive “gamechanger” policy reforms — measures that alter the basic “rules of the game” in the political battle between progressives and conservatives by changing the rights, resources, or procedural burdens of the players.

The right wing has enacted their share of gamechangers: requiring a supermajority to raise state or local taxes; requiring union members to explicitly opt-in for political contributions; defunding trial lawyers; and of course, suppressing the vote by requiring limited types of photo identification.

Progressives need to develop some gamechanging policies of their own, and a Gamechangers Task Force, led by Joel Rogers of ALICE and the Center on Wisconsin Strategy, has been working on that. This list is just a small sample of the policies that Task Force has discussed.

#1 Disclosure of corporate taxes paid by individual companies

Americans believe that large corporations are not paying their fair share of taxes. And they’re right. The situation in Illinois is typical: two-thirds of corporations pay no state income tax at all, only eight percent of state revenue comes from corporate income taxes, and the corporate share of taxes has been declining over the years.

The first necessary step to fix our broken system is transparency. We don’t know enough details about how corporations manage to evade taxes. To bring some fundamental fairness to our tax system, we need public disclosure. To be specific, all publicly-traded companies should disclose a summary of the amount they pay in state income taxes, including their tax rate and basis (income, credits and deductions).

It is true that we don’t and shouldn’t require such disclosure of individuals, but corporations are not people. Corporations are legal structures, created by state law, and they do not need or deserve the privacy rights of individuals.

#2 Sunset of tax expenditures

A “tax expenditure” is a form of stealth government spending accomplished through a federal, state or local tax code. Giving exemptions, deductions or credits to certain groups or for certain activities has the same effect as handing them money. Governments divert billions of dollars from general funds through the back door as tax expenditures.

Tax expenditures never receive the same scrutiny that budget expenditures do. While budget line items are reviewed and adjusted every year, few governments have any mechanism for reviewing tax expenditures. The fact is, many tax expenditures are unjustified giveaways to the rich, many were not properly targeted to achieve their stated objective, and others were justified when enacted but no longer make economic sense. So each tax exemption, deduction and credit should be examined periodically to weigh its costs, benefits and relevance to community goals.

The only effective way to bring fairness to the tax expenditure system is to require each to undergo a thorough review and be re-approved through the legislative process. This is accomplished by making all tax expenditures “sunset” every few years.

#3 Higher standards for firms receiving government support

State and local governments give billions of dollars in subsidies to corporations based on the idea that taxpayer funding is justified by the creation of new jobs and by future tax revenues that the particular project will generate.

A simple cost-benefit analysis shows that many of these subsidies are unjustifiable. Some governments now understand that it makes no sense to subsidize the creation of low-wage jobs because they cost the community more than they’re worth. Low-wage jobs require governments to support families with tax credits as well as health care, housing and other types of assistance. It’s not that we shouldn’t have low-wage employment, it’s that government should not subsidize corporations to create more.

When a decent-paying job is created, the employee can support a family without depending on government programs for assistance. That family’s spending supports local retail and restaurant businesses, building the local economy for the long-term and becoming an economic asset to the community. So governments should help create economy-building jobs, not economy-busting jobs.

Go one step further and add a “clawback” provision that provides taxpayers with a “money-back guarantee” if a company that receives economic development subsidies fails to create new jobs or maintain its current employment level.

#4 Stop and rollback privatization of public services

Since the Reagan era, state and local governments have been handing over a myriad of public functions to private corporations. American governments used to operate mostly through their own civil service employees with private contracts providing construction and supplies. Today, of course, there is no area that has not been handed over to private for-profit enterprises, including running public schools and prisons—and on the federal level even military and spy missions.

The argument for privatization is that it costs less. But this argument is rarely true either because the contractor simply charges more than civil servants would cost, or because the contractor pays such low wages that the employees have to be supported by government with food stamps, Medicaid, Earned Income Tax Credits, and other programs.

Besides cost disadvantages, privatization means that the public loses control of important public services. Citizens lose the ability to find out what is being done with their money, and they are shut out of the decision-making process. And because a corporation’s job is to make money, a privatized function is not operated in a manner to maximize public benefits, it is operated to maximize profits.

State and local governments should create a truly competitive bid process, limit the length of private contracts, analyze the impact of privatization, and give serious consideration to rolling back current privatization.

To better understand the issue, look through the excellent materials and arguments provided by In The Public Interest.

#5 Public financing of elections

Americans are disgusted by the way campaign financing corrupts the democratic process and gives unfair advantages to the wealthy and well-connected. Poll after poll shows that voters think the politi­cal system is controlled by special interests, especially big companies, political action committees, and rich individuals. And, of course, they are right.

Because of the Supreme Court’s Citizens United ruling and the activism of ultra-right billionaires, the amount of money pouring into political cam­paigns has grown exponentially. Americans want and expect us to do something about it.

Campaign finance reform is particularly critical at the state and local levels in order to keep the costs of running for office afford­able for the average citizen. We need officeholders who are able to concentrate on policy priorities instead of excessive fundraising demands for the next election.

Public funding of state and local elections works. New York City’s law, for example, requires participating candidates to limit campaign spending and in exchange a public fund will match each dollar a city resident contributes to the candidate up to $175 with six dollars in public funds for a maximum of $1,050 in public funds per donor. In addition, government contractors are forbidden from giving campaign contributions.

For much more discussion of how to talk to voters about a wide variety of issues, see our book, Voicing Our Values: A Message Guide for Candidates, which is available at www.progressivemajorityaction.org.